On Friday, HM Revenue & Customs announced that they would open a 4-week consultation period to discuss proposed changes to the legislation governing VAT claims and business entertaining.
This follows a case involving Danfoss and AstraZeneca, wherein the businesses successfully argued that the UK blanket 'block' on reclaiming Input VAT on business entertaining, should not apply to the business entertaining of overseas customers, as it was inconsistent with EU law.
In Revenue & Customs Brief 44/10, HMRC acknowledged that domestic law would need to be changed - but also pointed out that there might well be a corresponding private use charge so large as to offset any reclaimable Input VAT.
The consultation period will only last 'til 28 March - see Revenue & Customs Brief 09/11
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